Australia is leading a push to salvage a Pacific trade deal after President Donald Trump formally withdrew as a signatory to the 12-nation accord.
Prime Minister Malcolm Turnbull said he discussed the deal last Monday night with Japanese counterpart Shinzo Abe, and held talks with the leaders of New Zealand and Singapore. Steven Ciobo, Australia’s trade minister, told ABC Radio last Tuesday a Trans-Pacific Partnership without the US was ‘very much a live option.’
“We are all of us working to see how we can ensure we maintain this momentum toward open markets and free trade,” Turnbull told reporters last Tuesday in Sydney. “Losing the United States from the TPP is a big loss — there is no question about that — but we are not about to walk away from our commitment to Australian jobs.”
While Trump campaigned on a pledge to ditch the TPP, blaming trade deals for gutting US manufacturing jobs, Asian nations including Japan, had made a last-ditch effort to convince him of the merits of the pact. Trade aside, the deal was seen as a strategic counter to increased Chinese military and economic power in the region.
Reaching a deal without the US would be difficult. Without the carrot of the large American market, it would be hard to get member countries to agree the same access as decided under the TPP, according to Jayant Menon, lead economist for trade and regional cooperation at the Asian Development Bank.
“This is face saving,” Menon said of Australia’s efforts. “It is very embarrassing for all these countries when a lead proponent of the agreement which pushed it so hard should then be the one to bring it down.”
Whether anything will materialise is unclear. Japan currently isn’t considering a TPP without America, Deputy Chief Cabinet Secretary Koichi Hagiuda told reporters in Tokyo. Japan and the US account for more than 75pc of the gross domestic product among member countries.
“We want to continue persuading the US of the strategic and economic benefits,” Trade Minister Hiroshige Seko told reporters. “Among countries involved in the basic TPP agreement, it is extremely important that the largest economy, the US, is included. We will continue to remind the US of this tenaciously.”
Singapore, one of the biggest potential losers from a slump in global trade, has signalled it will push for the implementation of the TPP even without the US The export-reliant city-state’s economy probably saw its worst performance last year since the global financial crisis in 2009.
“Singapore will, with like-minded signatories, push for the ratification of TPP even without the US on board,” Eugene Tan, an associate professor of law at Singapore Management University who previously served as a member of parliament, said by e-mail. “The thinking is that it’s better to have a weakened TPP than to no TPP at all.”
New Zealand Prime Minister Bill English told reporters in Wellington that he asked Trade Minister Todd McClay to travel to the US to meet with Trump’s trade representatives when they are confirmed. McClay said earlier last Tuesday that he expected TPP ministers to meet over the next few months to consider how to move forward.
“Our preference was to have the US involved in the TPP,” McClay said in an e-mailed statement. “However, the agreement still has value as an FTA with the other countries involved.”
Ciobo, Australia’s trade minister said he’s had conversations with Canada, Mexico, Japan, New Zealand, Singapore and Malaysia. Whether a deal can move forward without the US also depends on the way that Trump renegotiates the North American Free Trade Agreement, he said.
Other countries involved in the TPP include Vietnam, Peru, Brunei and Chile. Even as they ponder the future of TPP, countries in Asia such as Malaysia and Japan are now turning their focus to the Regional Comprehensive Economic Partnership, an alternative 16-nation deal that includes China and India.
The TPP’s failure won’t curtail Malaysia’s trade and the country has alternatives including the RCEP, the official Bernama news agency reported, citing deputy trade minister Ahmad Maslan. With China and India involved in the RCEP it gives members access to an even larger market and Malaysia won’t face ‘any major loss’ from the collapse of the TPP, he was quoted as saying.
—Bloomberg contributors: David Roman, David Tweed, Shamim Adam, Anisah Shukry, Edward Johnson and Matthew Brockett.
— Bloomberg/The Washington Post Service
Published in Dawn, Business & Finance weekly, January 30th, 2017